Feb. 10—A private guardian who left many of his clients in financial ruin faces two lawsuits filed Thursday alleging he had neglected his duties to all 122 vulnerable Alaskans he had been charged with protecting.
The guardian, Tom McDuffie, is scheduled to appear in a public court hearing Wednesday, amid allegations of ongoing fraudulent activities involving his nonprofit company.
Beginning in 2022, McDuffie took on dozens of guardianship clients who were previously under the care of the state, after the Office of Public Advocacy claimed a years-long staffing crisis in its public guardianship section forced it to turn to private guardians.
But McDuffie and his private guardianship nonprofit, Cache Integrity Services, left dozens of those clients in debt and without the public assistance on which they relied to meet their basic needs.
A court visitor report filed Monday and obtained by the Anchorage Daily News, said Cache Integrity may be committing ongoing "fraudulent activities."
In October, retired Anchorage Superior Court Judge Eric Aarseth was appointed to oversee an investigation of McDuffie and his fitness to serve as guardian. Despite months of closed-door court hearings, there has been little public accountability for McDuffie and the public officials who signed on transferring dozens of vulnerable Alaskans to his company's care.
On Thursday, two of McDuffie's former clients filed lawsuits against him, alleging that he had "neglected the heightened fiduciary duties owed" to the plaintiffs and the 122 guardianship and conservatorship clients that McDuffie took on. The lawsuits were filed by Anchorage attorney Caitlin Shortell.
[Previous coverage: Alaska turned to a private guardianship agency to care for some of its most vulnerable residents. The result: dysfunction and debt.]
The identities of the plaintiffs are not shared in this story because they are vulnerable adults living with dementia. One lawsuit alleges that after McDuffie was appointed conservator, the plaintiff accrued a debt of more than $614,000 for an extended hospital stay resulting from McDuffie's failure to respond to calls for the hospital and guardian. Another lawsuit alleges that McDuffie failed to collect rent on the plaintiff's multiple rental properties, and made renovations on a property owned by the plaintiff without necessary permits, among other allegations. In both cases, McDuffie did not file taxes or set up a trust account for the plaintiffs.
The lawsuits allege that McDuffie and his agency mismanaged wards' funds, failed to apply for and manage benefits, charged excessive fees, failed to provide health care, failed to pay personal needs allowance, neglected wards' personal needs, and didn't communicate with wards, among other allegations.
McDuffie used a single account to handle his clients' funds, making it difficult, if not impossible, to identify individual clients' funds even after the clients were transferred to other private guardians or to the care of the public guardians in the Office of Public Advocacy.
On Monday, a court employee responsible for investigating McDuffie's potential wrongdoing filed an "urgent notice to the court," calling for "immediate involvement of law enforcement to investigate potential instances of theft and forgery." Asked if the courts took immediate action in response to the report, Alaska courts spokeswoman Rebecca Koford said she didn't know "what has been done with the urgent report."
Valerie Brogden, a court visitor, wrote in her report that "fraudulent activities may still be ongoing," putting at risk the funds of more than 100 guardianship clients and 200 representative payee clients, for whom McDuffie handles Social Security checks.
McDuffie declined an interview request, and declined to answer a list of questions sent by email.
'Special investigative conservator'
McDuffie began offering private guardianship services in 2021. In short order, the Office of Public Advocacy, or OPA — charged with serving as public guardian for vulnerable Alaskans who cannot find or afford a private guardian — sought to transfer dozens of cases to McDuffie's nascent nonprofit.
Last month, Aarseth appointed OPA as the "special investigative conservator," charged with protecting McDuffie's former clients whose funds may be compromised. In the decision to appoint OPA, Aarseth cited OPA's unique understanding of the laws pertaining to guardianship.
But advocates for wards question whether OPA can conduct an effective investigation because the agency's leadership, including OPA Deputy Director Beth Goldstein, was instrumental in encouraging Alaska courts to appoint McDuffie as guardian, despite his lack of experience or proven ability to protect wards.
Several people familiar with OPA's involvement asked the judge to appoint a special master to investigate the wrongdoing. That special master, they said, could act independently, including by appointing a forensic accountant to untangle the funds in Cache Integrity's account. They said a forensic accountant is necessary because of the collective accounting system used by McDuffie, which left dozens of clients' funds intermingled and indistinguishable.
The judge acknowledged the financial complexity of the case, writing in a court order that "the level and complexity of the accounting work needed far exceeds (work) ever expected of a Court Visitor."
But the judge decided against appointing a special master or forensic accountant, citing the lack of funds to pay such professionals.
"There has been no discussion of the selection process or the means by which the person appointed (i.e. hired) would be paid," Aarseth wrote.
On Wednesday, McDuffie filed a motion asking the judge to reconsider the appointment of OPA as special investigative conservator, calling it "a massive conflict of interest."
"OPA approached Cache Integrity Services to expand into guardianship, gave guidance on how to start it, and strongly pushed Cache Integrity Services expansion," McDuffie wrote.
Last month, Aarseth ordered a one-hour public meeting to be held Wednesday, Feb. 14, to address questions on "on how to unravel the Cache Integrity Services accounting, the fairest and just means by which to distribute what funds are being held, and who shall bear the cost if the hiring of a person or firm with the expertise to perform the work is necessary."
In the lawsuits filed Thursday in Anchorage Superior Court, the plaintiffs ask the court to appoint a special master not employed by Cache Integrity or OPA who "has no financial interest in either entity" to manage discovery, forensic accounting, and settlement of the plaintiff's claims. The plaintiffs also ask the judge to order McDuffie and Cache Integrity to pay for a forensic accountant to assess damages.
The lawsuits also ask the court to permanently ban McDuffie and all current and former Cache Integrity employees from acting as guardians, and to award damages to the plaintiffs' for "outrageous financial abuse," along with compensation for the plaintiff's "humiliation, emotional distress, inconvenience, and other monetary and dignitary harms."
According to Brogden, the court visitor, McDuffie reported to the court visitors concerns he had with his former employees. McDuffie regularly hired employees who had no experience in guardianship services, including some employees with a criminal history.
McDuffie reported finding "fake clients" in his accounting system that he was not the guardian or conservator for. He reported a payment of nearly $32,000 from one of the "fake clients" to an assisted living facility, with no invoices attached. McDuffie also reported checks of up to $10,000 written out to "individuals unrelated to the protected person" marked as "personal needs."
"The urgency of the situation cannot be overstated," Brogden wrote in her report. She added that McDuffie "has conveyed his attempt to 'fix' things on his computer, raising concerns that fraudulent activities may still be ongoing, or evidence may be compromised."
On Monday, McDuffie reported to the Wasilla Police Department that there had been a break-in to his office. Wasilla Police spokeswoman Amanda Graham said the case is currently under investigation and declined to provide additional information.